Friday, December 20, 2019

The $64,000 Question -- Why The Huge Jump? -- December 20, 2019

Link here.
Rates for Aframax-class crude oil tankers leaving the U.S. Gulf Coast hit a record this week, according to three shipbrokers, reflecting strong demand in Europe and the Mediterranean for low-sulfur crude (read: WTI; West Texas Light; Bakken].
Equinor ASA and Unipec, the trading arm of China’s top refiner Sinopec, provisionally chartered Aframax tankers Everest Spirit and Nordorchid, respectively, this week at rates of 245 worldscale points, according to one broker and Refinitiv Eikon data. Both vessels are headed to Europe.
The worldscale rate translates to about $60,700-per-day, well above the $46,800-per-day rate a week ago for Aframax vessels, according to calculations by shipbroker and consultants Poten & Partners. Aframax vessels can carry up to 700,000 barrels of oil.
Equinor and Unipec did not immediately respond to requests for comment. 
Trump's fault?

And there's a new word/phrase: "worldscale points." Link here. Fascinating. Some phrases from the linked article:
  • "worldscale": the code name for yada, yada, yada
  • controlled by panels of leading tanker brokers in London and NYC
  • oil cargo may be bought and sold many times whilst aboard a tanker at sea
  • the cargo owner requires great flexibility -- otherwise could be stuck with unwanted cargo (think "musical chairs")
  • worldscale offers that flexibility and normalizes transactions
  • worldscale is based on an average vessel with average costs earning an average rate
This happened back in 2008, at that time due to a shortage in tankers:
Zhuhai Zhenrong Co, a Chinese state-backed oil trader, hired the vessel Hormoz for 245 Worldscale points, according to a report from Athens-based Optima Shipbrokers.
From twitter today:

Whiting With Four New Permits -- December 20, 2019

Never mind: earlier today it was reported that an Israeli judge told Delek Drilling and Noble Energy to stand down, not to produce natural gas from the Leviathan basin. Someone must have made a phone call; the order was rescinded. The operators will begin producing natural gas on December 23, 2019.

Back to the Bakken

Active rigs:

Active Rigs5469514164

Four new permits, #37278 - #37281, inclusive:
  • Operator: Whiting
  • Field: Bully (McKenzie)
  • Comments:
    Whiting has permits for four State Federal wells in section 16-148-99 , Bully oil field;
Of note: twelve CLR wells were approved for "confidential" status --
  • seven of them are the Palmer Federal wells, in section 25-149-98, Haystack Butte, McKenzie County
  • five of them are the Pittsburgh/Uhlman Federal permits in section 7-152-99, Banks oil field, McKenzie County
Whiting renamed two "Oakland" wells Denowh wells:
  • #29505: Denowh
  • #29506: Denowh

Random Thoughts Regarding North Dakota's October Production, Director's Cut -- December 20, 2019

Previously posted:
North Dakota crude oil and natural gas production for October, 2019: there will be two headline stories this month based on this:
  • first: production bounced back very, very nicely after a horrendous September due to flooding, too much rain;
  • second: flaring in the reservation; not only is it worse than the state in general, but it is much worse, and on top of that, the trend is worsening, not getting better --
natural gas capture:
  • statewide, captured: 82% (81% reported last month)
  • statewide, captured: 
    • October, 2019:  2,524,405 MCF/day (preliminary)
    • September, 2019: 2,429,487 MCF/day
    • previous all time high was May, 2019: 2,287,761 MCF/day
    • FBIR Bakken:
      October, 2019, captured: 70% (was 79% in September) (75% reported two months ago, August, 2019)
A third, albeit a minor story: North Dakota officially produced more than 3 billion cubic feet per day of natural gas. That milestone appeared to have been broken in September, 2019, based on preliminary information, but it was revised downward, slightly, just less than 3 billion cfpd. This month, finally, a new milestone; 3 billion cubic feet per day, or approximately 500,000  boepd.

A fourth headline story that no one will report: North Dakota continues to hit new production records despite fewer and fewer rigs. Change in monthly production has much more to do with weather in North Dakota than with the rig count. 
NASDAQ on pace for longest winning streak since 2017

Utah Tops The Nation With Best Economic Outlook -- December 20, 2019

The Fox Business News segment this subject was incredible. Maybe it will show up on YouTube sometime.

From the internet siteEconomy All-Stars -- Utah Tops List Of Best Economic Outlook. Even during the live presentation on television, new and better numbers were coming in regarding Utah:
  • Utah tops list of best economic outlook
  • the state is cutting state personal income and corporate income; during the news presentation it was announced that the state was cutting state personal income and corporate income tax to 4.66%; previously it was a flat rate of 5%;
  • unemployment on the graphic during the presentation was 2.5%, but the presenter said new data just coming in said the unemployment rate had dropped to 2.4% -- the second lowest in the nation (she didn't mention the state with the lowest unemployment; North Dakota has a 2.5% unemployment rate)
  • job growth in Utah: 3.3%; top in the nation
  • big Utah employers:
  • Goldman Sachs
  • US Air Force
US employment: At this site, it is reported that Vermont has the lowest unemployment rate in the nations, at 2.3%. I assume that anyone who cannot find a job in Vermont, moves out of state; and/or, has quit looking for a job, and thus does not show up in the statistics.

Politics: except for Ronald Reagan, I've never seen a US president unite the Republican Party to the extent Trump has. Not only did not one US House GOP member vote with Nancy Pelosi, two democrats voted against impeachment; a third voted "present," taking a page from the Obama playbook on tough issues. Two democrats actually switched parties over this issue.

Fact check needed: Rush said this morning, if I heard him correctly, Trump is the first president in the history of the United States to have never started a war. Trump may have inherited some wars, expanded others, but he is the first, according to Rush if I heard him correctly, to have never started a war.

Politics: this is so incredibly bizarre. It is now being reported that Nancy Pelosi has "invited" President Trump to deliver the state of the union address on February 4, 2020. This is less than two days after Trump was "impeached." If I recall correctly, there was some question if Trump would give the state of the union address to a joint session of congress some time in the past couple of years -- something about Nancy Pelosi not inviting him .. but now this year, an impeached president, "a clear and present danger" to the United States; an agent of Russia; is now being invited by Nancy Pelosi to give the state of the union address.
Now I recall: it was last year; Nancy Pelosi said no state of the union address until "government re-opened." In lieu of the state of the union address, Trump suggested he might hold one of his standing-room only rallies where crowds exceed the size of the arenas.
    Yeah, like this will work. If it looks like a scam, walks like a scam, quacks like a scam, it's probably a scam. 300-acre city for California's homeless proposed. Cost: $3 billion. Funding? GoFundMe. So far:
    A GoFundMe effort with a goal of $50,000 for the proposed city had raised just $60 as of Thursday [December 19, 2019].
    Sounds like Occasional Cortex is the chief finance office (CFO).

    Notes From All Over, Part 1 -- December 20, 2019

    From the EIA:

    The market: I'm starting to lose interest in the market. Nosebleed levels. Posting this simply for the archives, but with regard to the market, I'm outta here. I assume all three major indices will hit new all-time highs today. I assume the movers and shakers, after seeing the debates last night, know there's no way Trump will not be re-elected.
    • Dow: up over 100 points in early trading
    • S&P 500: up 14 points
    • NASDAQ: up 24 points
    • WTI: $60.51
    • BA: apparently no one got the news regarding the botched launch; Boeing flat; later, down $3.00;
    • AAPL: up $1.53
    • SRE: flat
    • UNP: up slightly; reverses recent pullback
    • XLNX: up a bit, unremarkable
    • EW: down a bit, unremarkable
    • PCAR: up a bit, unremarkable
    • IMUX: after healthy jump yesterday, flat today
    Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

    Maybe We Need To Let Elon Musk Run Boeing -- December 20, 2019

    This was the final test before launching the capsule with two astronauts next time. Docking has not yet been tested.

    Every time I read mishaps like this and how much trouble the EU is with their plan to put robot on the moon (or is it Mars) reminds me how incredibly NASA was with six successful manned landings on the moon, and no loss of life on seven of those moon missions.

    Boeing shares (BA) fell another $5.50 today.

    YouTube Shuffle

    Do you remember all those YouTube video compilations of pundits, anchors, etc, laughing at / about Trump going into the 2016 election? An example below. They are almost impossible to find now.

    Laugh, Laughing, Trump, Election, 2016

    Holy Mackerel, Maude -- They're Burning Oil In New England To Make Electricity; $240/MWH -- December 20, 2019

    From ISO New England this morning and I don't think winter sets in for another day or so.

    Fuel mix to make electricity includes:
    • oil (7%)
    • coal (3%)
    • despite a glut of natural gas just to the west of them. 

    Posted earlier from a reader:
    Update on grid for Connecticut / Rhode Island, from a reader:
    • the current spot price of electricity in Connecticut/Rhode Island is $161/Mwh;
    • oil hit 5% fuel level earlier -- oil needed to produce electricity in this country -- wow!!
    • nuclear plant (1 of 3 in region) Millstone 3 is down for unscheduled repairs;
    • LNG tanker just arrived at Everett with LNG from Trinidad -- despite the US having a glut of its own natural gas;
    • reason for all this: natural gas pipeline expansion projects blocked
    • "we" xpect years of this unnecessary 'drama'
    • crucially needed transmission line from Canada - Clean Energy Connect- is now facing a "no go" referendum next autumn -- I think this has to do with transmission lines through neighboring states

    Five Wells Comiing Off The Confidential List Today -- December 20, 2019

    Update on grid for Connecticut / Rhode Island, from a reader:
    • the current spot price of electricity in Connecticut/Rhode Island is $161/Mwh;
    • oil hit 5% fuel level earlier -- oil needed to produce electricity in this country -- wow!!
    • nuclear plant (1 of 3 in region) Millstone 3 is down for unscheduled repairs;
    • LNG tanker just arrived at Everett with LNG from Trinidad -- despite the US having a glut of its own natural gas;
    • reason for all this: natural gas pipeline expansion projects blocked
    • "we" xpect years of this unnecessary 'drama'
    • crucially needed transmission line from Canada - Clean Energy Connect- is now facing a "no go" referendum next autumn -- I think this has to do with transmission lines through neighboring states
    CBR: Canadians love the railroads, apparently. Canadian CBR will spike next year -- will grow by 100,000 bbls/day. Currently as high as 400,000 bopd; could reach 550,000 bopd. As a reminder: 30 - 40 tank cars can car one million bbls of oil. A unit train is 100 - 110 cars in length. 

    Pretty amazing: after all these years of preparation and work, on the very day that Israel is ready to start producing natural gas from the Leviathan project, Jerusalem's district court -- which I assume is one old man, maybe three -- told Delek Drilling LP and Noble Energy Inc to stand down. The reason: there are concerns that the project may endanger the health of the public. Great news for Russia and other countries supplying that part of the world with natural gas. [Later, same day, the ruling was rescinded; Noble and Delek will start production on Monday, December 23, 2019.]

    Exit, stage left: Daimler, BMW exiting North American car-sharing market; cutting in Europe.  People like their own cars. Duh.
    DriveNow, part of the combined firm, started in London in December 2014, but "had to face the hard reality that we could still not convince enough people to do so," the company said in announcing its exit from the UK market.
    It is the latest sign of financial struggles in the broader mobility market and a setback to those who view car-sharing as a way to reduce carbon pollution and congestion, because unlike ridesharing services, the vehicles are not on the road between trips.
    Back to the Bakken

    Tioga, ND: new police station, Norseman Museum to open in March, 2020.

    Job openings in North Dakota: 14,000. That's the headline. In fact, 14,749, which in my book,if one is rounding, is 15,000 jobs. Unemployment rate: 2.5%.

    Active rigs:

    Active Rigs5369514164

    Wells coming off the confidential list today -- Friday, December 20, 2019: 61 for the month; 266 for the quarter:
    • 36170, drl, XTO, Lavern 42X-14AXB, Capa,
    • 34839, 1,065, Enerplus, Apollo 149-93-33D-28H-TF, Mandaree, t6/19; cum 42K 10/19;
    • 33886, SI/NC, Petro-Hunt, USA 153-95-8A-31-3H, Charlson, no production data,
    • 34745, 103, Oasis, Nordeng 5298 13-25 7T, Banks, t6/19; cum 106K 10/19;
    • 30177, SI/NC, Slawson, Muskrat Federal 5 SLTFH, Big Bend, no production data,
    RBN Energy: NuStar's CAPEX plan addresses trio of crude and refined product challenges.
    The midstream sector in Texas is still in the midst of what seems to be a never-ending build-out of new pipelines, storage terminals and export docks, all aimed at keeping pace with rising production and refining volumes and the increasing need to move incremental output to foreign markets.
    Given the understandable desire of midstream companies to earn revenue and profits multiple times as hydrocarbons move from the lease to end-users, it’s not surprising to find midstreamers at work on a variety of projects along the way. A prime example would be NuStar Energy, whose capital spending plan for 2019-20 is focused on helping to resolve three bottlenecks: between its crude oil gathering system and takeaway pipelines in the Permian, between takeaway pipes and export docks in the Corpus Christi area, and between South Texas refineries and refined products customers in Mexico. Today, we look at a leading midstreamer’s multifaceted expansion effort in the Lone Star State.
    It’s fair to say that the Shale Revolution changed everything, and that its application to the Permian took it all up a few notches. For the past four years in particular, the expectation — and then, the reality — of phenomenal production growth in West Texas and southeastern New Mexico has spurred the development of many new gathering systems for crude oil and natural gas, as well as new gas processing plants, takeaway pipeline capacity, fractionation plants, refinery capacity, export docks and liquefaction trains — new refined-product pipeline capacity too. And don’t forget new storage tanks and new steam crackers. Amazingly, after all that’s been accomplished on the midstream front since the start of 2016, there’s still a lot more to do, as evidenced by NuStar Energy’s capital expenditure plan for 2019-20.

    Road To Australia -- The Cost Of Electricity -- Peak Demand -- $15,000/MWH -- December 20, 2019

    Link here. Energy-rich Australia -- exporting coal and natural gas to Asia -- Australia switching to solar energy.